Contractors' Questions: How to invoice an Italian client?

Contractor’s Question: I'm a UK resident and my Plan B in freelance web design has secured a couple of clients based in Italy. I'll be working extensively with that country from here in the UK. But what I want to know is if, due to the type of service I will provide, my client would need to apply for ‘reverse charge VAT.’

With or without this approach, what details do I need to include on the invoice to make it useful for my clients? All of the clients should have their own Italian VAT (called P.IVA as per Italian law) and my threshold is below £70,000.

Expert’s Answer: Unfortunately there is no quick answer. Your circumstances - and question about ‘reverse change VAT’ - should be directed by you to HM Revenue & Customs. You shouldn’t settle for anything less than their official guidance.

Generally, if you are not VAT registered then no VAT applies to UK sales; while EC sales are applicable provided you know the customers local VAT number. You would normally show this on the invoice but, again, no VAT is chargeable as it is an export sale.

If you have a UK company that is VAT-registered, and you have no local VAT number for your customer(s) in Italy, or another EU country, then VAT is charged at the usual UK rate. However this aspect, and the other facets of your situation, should be checked with HMRC before you proceed. Still, your invoice to an EU-based client should definitely show the same details as if you were invoicing a client in the UK.

The expert was Sid Home, managing director of Safe Collections.